National Association of Realtors® 2011 Home Buyer Survey Results – First-Time Home Buyer Statistics

by 04 May 2012

The 2011 NAR report called “Profile of Home Buyers and Sellers 2011” has just been released, with a huge amount of information that will help you plan where you should be spending your time and your marketing dollars!  While this info is from 2011, what it does is identify trends. 

In 2010, 51% of all home purchases were made by FTHB.  In 2011, it was 37%.  The 2010 numbers are skewed because of the First-Time Home Buyer Credit offering.

Overall, the numbers have significantly changed AGAIN.  Since the report provides stats on first-time buyers, repeat buyers, FSBO, and investors, this article is strictly about the first-time home buying segment, how the stats compared from 2010 to 2011, and a little commentary from me on why the information is critical in your business planning efforts.

First-time home buyers made up 37% of all homes purchased…

2011

FTHB by Area

2010

46%

Northeast

56%

35%

Midwest

51%

34%

South

46%

42%

West

52%

Tip:  Still, over one-third of all homebuyers are buying for the first time.  In this article, you’ll also learn that 92% of FTHB researched the Internet (websites, social media, blogs) before deciding which home to buy and which real estate agent to use.  I suggest that you align your marketing with the way FTHB find information – but more on that later.

Living arrangements prior to buying their first home…

Prior to buying their first home, 77% of FTHB rented (i.e., an apartment or a home).  This is up 2% from 2010.  19% lived in a home—a decrease of 2%.  Broken down by marital status:

2011

Living Arrangement

2010

49%

Single Female

52%

47%

Single Male

55%

37%

Unmarried

67%

58%

Married

45%

Tip:  Over three-quarters of first-time home buyers are living in apartment complexes, and it is still the number one way to market to them even before they start the home search process.  You can purchase apartment complex mailing lists at www.apartmenttoolkit.com .

Marital status of FTHB…

The big change is the increase of married couples buying their first home.

2011

Marital Status

2010

54%

Married

48%

12%

Unmarried

12%

21%

Single Female

23%

12%

Single Male

15%

Tip:  If you are holding home-buying seminars, consider segmenting them into “Couples Only” or Singles-Only” First-Time Home Buying seminars.  You may want to segment the “singles-only” by “divorced FTHB’s.”  Each segment has its own set of home-buying and loan-approval issues. 

Median age of FTHB…

This is about the same as last year.

2011

Median Age

2010

9%

Age 18-24

11%

52%

Age 24-35

56%

20%

Age 35-44

19%

Average income of FTHB…

Big change here. A single male’s income significantly decreased while a single female’s income increased slightly.

2011

Income

2010

73,200

Married

71,200

69,800

Unmarried

62,600

46,300

Single Female

46,100

47,900

Single Male

52,800

Purchase price range...

No big changes here over last year, however the lower-priced homes have had a slight increase.  This is probably due to the fact that the home values have been decreasing.

2011

Price Range

2010

10%

< 75K

6%

12%

75K > 100K

11%

12%

100K > 125K

15%

14%

125K > 150K

15%

10%

150K > 175K

12%

TIP:  While some areas are more affordable than others, 48% of FTHB purchased a home at $150,000 or less.  This is a great reason to meet with your real estate agents.  Ask them to review all their listings and see if they can negotiate seller incentives or special financing options like FHA and USDA (if the property qualifies). 

Moving distance from current residence...

The distance from where a FTHB is living now to their new home is 12 miles.  That has not changed over the last three years.  It’s the same if living in an apartment or with parents/family.

TIP:  If you are marketing to apartment complexes, consider the location of the complex in relation to the housing price ranges for FTHB.  Check to see if the subdivisions within a 12-mile radius have housing prices at $150K or below.  If not, you may not want to market to those complexes.

Information source prior to buying a home…

The typical buyer who used the Internet is 42 years old (up from 37 yrs. In 2010) with an average income of $83,700.  The typical buyer who did NOT use the Internet is 60 years old (up from 57 yrs. in 2010) with an average income of $60,300.  Those using the internet took twice the amount of time to find a home versus those that did not use the web.  Interesting?????

2011       Info Resource                   

92%        Searched for home on web prior to buying

88%        Searched for Real Estate Agent online

53%        Yard signs

40%        Open houses

28%        Newspaper ads

17%        Homes magazines

 5%         TV/radio

TIP:  If you are spending money advertising in your local homes’ magazines, or if you are paying to publish rates in the newspaper, you may want to reallocate your money to online marketing instead. 

Financing the home purchase…

It’s the same as last year—95% of home purchases were FIXED RATE Mortgages.

2011

Types of Financing

2010

30%

Conventional

27%

54%

FHA

56%

6%

VA

7%

5%

Other

5%

TIP: When it comes to fixed rate mortgages, be different than everyone else and instead of offering a 30-year term, give them an alternative 25-year fixed rate option.  The payment is a little higher per month, but the interest savings is significant ($30K for $100,000) and they build up equity quicker.  Think about this—if only LO’s had offered more 25-year fixed rate mortgages in 2005-2006, there would be a lot less people upside down on their homes.

Source of down payment…

The percentages have increased over the last three years, indicating that people are buckling down and saving more money. 

2009 – 61% from own savings – 22% Gift Funds

2010 – 74% from own savings – 26% Gift Funds

2011 – 79% from own savings – 26% Gift Funds

TIP:  Fannie, Freddie, FHA and VA have their own “gift fund rules.”  For example, there are five different ways funds can be gifted for FHA loans.  They are complicated and just one little error will hold up your closing.  Mortgage rule updates can be found at www.MortgageCurrentcy.com

 

FTHB tenure in resale of home...

2011

Resale Tenure

2010

2%

Sell home 2-3 yrs

3%

12%

Sell home 4-5 yrs

16%

3%

Sell home 6-7 yrs

4%

15%

Sell home 8-10 yrs

14%

TIP:  It used to be that the average time people plan to sell their home and buy another one was 7 years.  Looks like the two new timeframes are from 4 to 5 years, and from 8 to 10 years.  Plan to stay in touch with past clients for the long haul.  That’s where a database, along with a killer email marketing system, will be a key component of your business.

FINAL MARKETING TIP:  Consider meeting with your real estate agents.  I’d bet you that they have never seen this report, let alone broken it down by the first-time homebuyer category. 

Use these stats to help you create a game plan between the two of you—based on the tips I’ve provided after each statistic. 

Karen Deis, President, ApartmentTookKit.com, providing apartment address mailing lists and marketing systems for attracting leads from apartment complexes.  Why market to apartment complexes?  Because the address never changes, but the people who live there do, so you are constantly marketing to new people. 

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